Technology & Innovation

Restarting the Palisades Nuclear Plant and Keeping Momentum on Clean Energy

04.11.24 | 4 min read | Text by Jacob Robertson

The Department of Energy (DOE) announced recently that it will finance the restart of a nuclear power plant through a new program to revitalize energy infrastructure and reduce greenhouse gas emissions. Restarting the Palisades Nuclear Power Plant, which was shut down in 2022, will be the first restarted nuclear power plant in U.S. history, bringing back much needed clean firm energy supply to Michigan, Illinois, and Indiana. DOE estimates that the addition of this clean capacity will prevent yearly emissions equivalent to that emitted by nearly one million gas-powered cars. The plant owners also shared intentions to use existing infrastructure to build two small modular reactors, a newer type of reactor technology that can be deployed more flexibly than existing commercial light-water reactors. DOE’s announcement is a significant step in addressing emerging energy needs and reducing emissions, but more is needed to ensure a successful plant restart and to expand clean energy capacity broadly.

Nuclear power was commercialized in the U.S. in the 1950s, and electricity generated by this technology accounts today for about 19% of the country’s electricity supply. Nuclear is a baseload power source, also called clean firm power, that complements generation from intermittent sources such as wind and solar energy. But in many cases, nuclear energy struggles to compete economically with other energy sources. The original decision to close the Palisades was primarily financial. Consumers Energy, the utility that purchased energy from the plant, intended to replace the nuclear energy with natural gas, which is ample and inexpensive. The dynamic is not unique—utilities are using more fossil fuels as the grid attempts to respond to a rapid increase in demand. But commercial light-water reactors, like those at the Palisades, are the most mature clean technology option to meet near-term energy needs while reducing emissions. The federal government should shape the market for nuclear power, or risk more plants shutting down—and making ambitious emissions reductions goals likely impossible to meet. 

The conditional commitment from the DOE Loan Programs Office (LPO) to finance the Palisades restart ensures nuclear power is cost-competitive, and this particular type of loan is an important tool for DOE to develop and deploy more clean energy technologies. Since the loans are conditional on the companies meeting agreed-upon commitments, the arrangement allows DOE to closely monitor progress and halt funding if the project does not meet expectations. The LPO, established by Congress in 2005 to invest in critical energy and infrastructure projects, has found much success, especially with an increase in funding from the recent Inflation Reduction Act (IRA). Since the IRA passed in 2022, LPO has issued over $16 billion in conditional commitments and disbursed over $30 billion. The office’s approaches to lending seem to work well—for FY2023, they reported actual losses of only 3.1% of total funds disbursed. Other examples of recent conditional commitments include a real-time methane emissions monitoring network and a solar energy storage microgrid, reflecting investments across key clean energy technologies. But the Palisades commitment is unique as it is the first issued through DOE’s Energy Infrastructure Reinvestment program, which has $250 billion available to fund clean energy projects that revitalize or replace existing infrastructure. The $1.5 billion loan to Palisades will help fund refurbishment, upgrades, and testing to operate the plant for an estimated 25 years. Since the initial appropriations for this program expire in September of 2026, the DOE should act quickly to finance similar projects that revitalize existing infrastructure.

Outside of loans, the federal government can do more to support the restart and ensure other nuclear plants continue generating clean baseload energy for as long as safely possible. Next, the Nuclear Regulatory Commission (NRC) will need to amend the license of a plant it already classified in a state of decommissioning. The NRC formed the Palisades Restart Panel (PRP) to advise on the reviews required for this new regulatory situation. Although the primary objective of the PRP is to advise on the Palisades, NRC gave the panel the option to provide general recommendations if other licensees pursue a restart. Twenty other nuclear power reactor sites are in decommissioning status. To provide clarity to the nuclear industry on options for these sites, the panel should take advantage of this opportunity to advise generally on a process for restarts. The DOE should also signal whether it intends to make further investments in this area. This first-of-kind project could demonstrate that restarting plants is a fast and economical way to increase clean firm generating capacity.

Federal policymakers, agencies, and the private sector should consider additional options for expanding nuclear capacity at this moment when nuclear power is viewed favorably by most of the public and partisan division is low. For example, utilities could form consortiums to build multiple reactors of the same design, reducing risk and cost with the construction of each new reactor. The DOE could mass-acquire NRC permits on behalf of developers, or use the Foundation for Energy Security and Innovation (FESI) to accelerate licensing through stakeholder and community engagement. Congress could also consider categorical exclusions under the National Environmental Policy Act for actions that use existing energy infrastructure and have a net positive benefit to the environment, such as building nuclear power plants on former coal plant sites. The LPO has nearly $412 billion in loan authority to advance clean energy. It should continue to negotiate and award conditional commitments for more clean energy projects across the country, working closely with applicants and recipients to ensure adequate progress and effective use of taxpayer dollars. Other federal policymakers should keep momentum on DOE’s commitment to Palisades with further actions to keep nuclear power on the grid.